India Vehicle Finance Booms: CV & Used Cars Lead Growth

India’s commercial vehicle (CV) financing sector demonstrated robust expansion, growing at a 20.1% Compound Annual Growth Rate (CAGR) over five years, from June 2021 to June 2026. Simultaneously, used-car loans emerged as the fastest-growing segment, recording an even higher 26.2% CAGR during the same period, according to a CRIF High Mark research report.

Key Growth Metrics

This significant expansion anchored an overall growth in the country’s vehicle lending market. The surge in used-car financing, specifically, is attributed to its increased formalization and evolution into a mainstream credit product across India.

• CV financing CAGR (June 2021-June 2026): 20.1%
• Used-car loans CAGR (June 2021-June 2026): 26.2%
• Used-car borrower numbers expansion: 2.4 times

The findings from CRIF High Mark indicate that India’s vehicle finance market is entering a phase of more segmented and diversified growth. Commercial vehicles and used cars are serving as primary drivers of this ongoing expansion.

Evolving Market Trends and Lending Patterns

A clear premiumization trend is now evident within auto financing, characterized by larger ticket sizes and a growing number of multi-loan borrowers. While two-wheeler financing still maintains the largest overall borrower volume, it introduces 80% new-to-product consumers to credit.

• Overall vehicle loan originations (Q1 FY27 YoY increase): 17.1%
• Average auto-loan ticket size: Rs 8.6 lakh
• Average exposure per borrower (CAGR): 9.2%
• Share of auto loans exceeding Rs 15 lakh: from 27.6% (Q1 FY25) to 29.8% (Q1 FY27)

This shift towards higher-value disbursements contributes to the overall rise in loan originations. The market is seeing consistent transaction volumes across its various segments.

Asset Quality and Future Considerations

Regarding asset quality, later-stage delinquency indicators have shown improvement across most categories. Auto loans consistently maintain the lowest risk profile within the broader vehicle finance market.

However, commercial vehicle loans specifically exhibit comparatively higher early-stage delinquency. The CRIF High Mark report also highlighted a need for tighter bureau-level concentration checks.

This recommendation comes in light of the observed increase in commercial vehicle borrowers holding multiple active loans simultaneously. Such checks would help manage potential risks associated with concentrated exposure.